The issue
As energy costs rise, so does the burden of these costs upon American households. Low income households are shown to be the most vulnerable to these rising costs. Even with programs such as the Low Income Home Energy Assistance Program (LIHEAP) in place, many American families must make the difficult choice of either heating or eating. In response to this dilemma, many households reported going to such extreme measures as closing off parts of their homes, keeping temperatures at unsafe levels, and even using a kitchen stove as a source of heat.
How we got to this point
The confluence of rising heating and cooling bills along with the current economic downturn has resulted in more Americans applying for energy assistance programs. This need is illustrated by Congress and the President’s authorization of a LIHEAP budget increase from $2.57 billion in 2008 to $5.1 billion in 2009. Further, a report from Oak Ridge National Laboratory found that the price increase for both natural gas and residential heating oil over the past decade "has outpaced the increase in purchasing power of low-income households." This has led to a greater energy burden for low-income families, with many middle-class families also beginning to feel the pinch.
LIHEAP recipient households:
- 92% had at least one vulnerable household member.
- 36% were unemployed at some point during the previous year.
- 25% used medical equipment that requires electricity.
- 49% skipped paying or paid less than their entire home energy bill.
- 3% moved into a shelter or were homeless.
- 25%had someone in the home become sick because the home was too cold.
- 30% went without food for at least one day.
SOURCE: National Energy Assistance Director’s Association. 2009 National Energy Assistance Survey. April 2010.
*AFDC- Aid to Families with Dependent Children
*SSI elderly- Social Security Income elderly
What the stakes are
Many safety concerns arise when families must decide how to compensate for high energy costs. Often food is one area where they skimp in order to make ends meet. Researchers from the Children’s Sentinel Nutrition Assessment Program at the Boston Medical Center have discovered that children in energy insecure households typically also demonstrate poorer health and are more
Additionally, incidents of fire, contact burns, and carbon monoxide occur more frequently in low-income households as families try to supplement central heating with in-home kerosene, propane, portable electric heater usage, among other sources.
The National Energy Assistance Director’s Association reports record number of housholds applying for energy assistance programs in 2010
Application are up 20% or more in 17 states
- 68% in MS
- 42% in WA
- 38% in MI
- 34% in NV
- 31% in NJ
- 28% in WV
- 26% in CO
- 25% in KS, NH, WI
- 21% in MT
- 20% in CA, OR, SC, SD, TX, RI
What the industry says
Rising energy costs are not a problem unique to consumers, they also affect the utilities providing the services. To help mitigate the strain on consumers, utility companies have spent a great deal of time and money on the development of energy efficiency and demand response programs, among other efforts. Additionally, many utilities participate in LIHEAP Action Day, where they advocate for increases to the LIHEAP program budget. Some companies even offer programs where utility bills can be levelized throughout the year. While this does not actually reduce energy costs, it does assist families in budgeting from month to month.
AEP position
AEP understands the rising cost of electricity is challenging for American families, especially those in lower income brackets. We applaud programs to help them deal with these costs, and urge policymakers to exercise great caution in implementing unrelated policies that will ultimately result in significantly higher consumer bills.
